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Recent years
have seen dramatic changes in many parts of the world. The Soviet Union has disintegrated
and, with the resurgence of competing nationalisms, its constituent republics have gone in
different directions. Eastern Europe is almost unrecognizable as the result of unpredicted
events. The Cold War is over and the former strategic and ideological tensions that
characterized it are now a mere memory. These quickly-changing developments have been
challenging for political leaders in all countries. Old political movements and
institutions are rapidly being replaced by new ones whose origins and destinations are
difficult to analyze using past knowledge and experience. This accelerating rate of change
represents a major challenge to the security and intelligence agencies that exist to
provide information and advice to policy-makers in their client government institutions.

David L.
Christianson has provided the following concise definition of the functions of an
intelligence organization:

Intelligence
organizations provide foreknowledge to the national leadership ... by gathering
intelligence information from a myriad of sources, evaluating this information to
determine its accuracy, analyzing the information from all available sources, and finally
producing and disseminating an intelligence product or report to the consumer.(1)

The Government
of Canada has recently defined foreign intelligence in the following terms:

Foreign
intelligence refers to intelligence or information concerning the capabilities, intentions
or activities of foreign states, corporations, or persons. It may include information of a
political, economic, military, scientific, or social nature, and can produce information
with security implications.(2)

This paper is
about the Communications Security Establishment (CSE), one of a galaxy of agencies in
Canada that fit most, if not all, the elements of these definitions of an intelligence
organization with responsibility for foreign intelligence. The CSE is one of the most
secret and secretive organizations in Canada. What is known about it - for example, what
appears in this paper - must be pieced together from disparate sources. Unlike the
Canadian Security Intelligence Service (CSIS) and the RCMP, the CSE has no governing
statute setting out its mandate, powers and control/accountability mechanisms. In general
terms, the CSE has a dual mandate; one, Signals Intelligence (SIGINT), is offensive in
nature; the other, Information or Communications Security (INFOSEC or COMSEC), is
defensive. There will be more about these issues later in the paper.

Canada is not
the only country to have a foreign intelligence agency like the CSE. In the United States,
the agency is called the National Security Agency; in the United Kingdom, it is called the
Government Communications Headquarters; in Australia, it is called the Defence Signals
Directorate; and in New Zealand, it is called the Government Communications Security
Bureau.

This paper
first sets out a concise history of the CSE from its origins to the present day, including
information on its budgets, person-years and operation. Next, the CSE's mandate and
accountability for its operations are addressed. Several proposals for the reform of the
CSE, offered over the years by diverse sources, are outlined and some conclusions are
offered.

The CSE has
its roots in cryptographic and cryptanalytical developments during World War II. It
was established in June 1941 as the Examination Unit of the National Research Council and
was located in the house next to what was then the Prime Minister's residence on Laurier
Avenue in Ottawa. It was felt that in this location the necessary security precautions
would not attract undue public attention. For the first part of its existence, the
Examination Unit was given particular responsibility for intercepting and analyzing the
communications of Vichy France and Germany. With the entry of Japan into the Second World
War, the Unit was also given some responsibility for the decryption of that country's
communications. It is estimated that by 1944 the Examination Unit had 45 staff members,
among whom were a number of classicists and chess players, people capable of thinking in
cypher.(3)

In September
1945, U.S. President Truman concluded that peacetime SIGINT operations were necessary and
there would have to be collaboration in this area with other countries. In December 1945,
Canadian authorities came to the same conclusion. At some point thereafter, the
Examination Unit was renamed the Communications Branch of the National Research Council.(4)

In 1947, the
UK/USA Security Agreement came into force. The parties to that agreement were, and still
are, the U.S., Great Britain, Canada, Australia and New Zealand. This agreement, the
content of which has never been made public and which is still classified as "top
secret," divided up spheres of cryptographic influence and responsibility with the
U.S. and Great Britain designated as "first parties" and the remaining
signatories as "second parties." This appears to mean that the processing and
analysis of raw signals intelligence data provided by "second parties" is
largely carried out by the "first parties." Canada was assigned responsibility
for the northern part of the former Soviet Union and parts of Europe. The contents of the
UK/USA Agreement, which themselves may not exist on paper, are kept up-to-date in a top
secret handbook called International Regulations on SIGINT. In 1948, Canada entered
into a similar bilateral arrangement with the U.S. called the CANUSA Agreement.(5)

The existence
and functions of the Communications Branch of the National Research Council did not come
to public attention until 1974, when they were revealed on a CBC television program.
Canada's part in the UK/USA Agreement was revealed only on 24 March 1975, in
responses by the Honourable C.M. Drury, then Minister of State for Science and Technology,
to questions before the House of Commons Standing Committee on Miscellaneous Estimates.(6)

As of
1 April 1975, "control and supervision" of the now-renamed Communications
Security Establishment was transferred by Order in Council under the Public Service
Rearrangement and Transfer of Duties Act(7)
from the National Research Council to the Department of National Defence.(8) At that time, the CSE was believed to have between 250 and
300 civilian employees, and a budget of approximately $5 million annually. By 1983,
it was believed to have about 580 civilian employees.(9)

The existence
of the CSE was officially acknowledged for the first time by the Government of Canada when
the Honourable Jean-Luc Pépin, then Minister of State for External Relations, made the
following statement to the Special Senate Committee on the Canadian Security Intelligence
Service on 22 September 1983:

The
Communications Security Establishment advises on, and provides the means of ensuring the
security of federal government communications. It also provides, with the support of the
Canadian Forces Supplementary Radio System, a service of signals intelligence in support
of Canada's foreign and defence policies. I should explain that "signals
intelligence" is the term given to information gathered about foreign countries by
intercepting and studying their radio, radar, and other electronic transmissions.(10)

The CSE's
budget allotment is not made public. In response to questions before the House of Commons
Standing Committee on Public Accounts on 10 October 1991, a CSE representative
indicated that the agency's INFOSEC/COMSEC activities represented 20% or 22% of its
budget, or about $20 to 25 million annually.(11)
It may on this basis be concluded that in 1991 the CSE's budget was in the $100 to
$125 million a year range. This does not tell the whole story; the Department of
National Defence, Canadian Forces, contributed, it was estimated, in 1991 an additional
$150 million in personnel and other support to the CSE's SIGINT activities.(12)

In April 1991,
the Department of National Defence indicated, in response to questions, that the Public
Service Staff Relations Board had made public the following data with respect to CSE
person-years:

These figures
in themselves were somewhat misleading as they did not include the CSE's exempt personnel
and did not indicate the contribution of the Department of National Defence, Canadian
Forces, to the CSE's SIGINT activities. It was estimated in 1991 that the CSE itself had
about 850 employees and that the Canadian Forces assigned about 1,100 persons to operate
monitoring stations in Canada, Bermuda and Germany.(14) In June 1993, it was established that the CSE itself at
that time had 875 employees.(15)

In 1991, it
was established that CSE monitoring stations were located in the following places:
Argentia and Gander in Newfoundland, Leitrim Canadian Forces Station near Ottawa, Massett
Canadian Forces Station in B.C., and Canadian Forces Station Alert at the tip of Ellesmere
Island (the most northerly permanent military facility in the world) as well as in
Bermuda.(16)

As stated
earlier, the CSE has a two-part mandate - Signals Intelligence (SIGINT) and Communications
or Information Security (COMSEC or INFOSEC). Ward Elcock, Deputy Clerk, Security and
Intelligence, and Counsel, Privy Council Office, on 20 April 1990 described the two
roles of CSE during testimony before the House of Commons Special CSIS Review Committee as
follows:

One of those
is sometimes known as the COMSEC role, which deals with the security of the communications
of the Government of Canada. The second responsibility is the collection of signals
intelligence, which is intended to provide the government with foreign intelligence on the
diplomatic, military, economic, security, and commercial activities, intentions, and
capabilities of foreign governments, individuals and corporations.(17)

The government
described the CSE's two-part mandate as follows in its 1991 Response to the 1990 Report of
the House of Commons Special CSIS Review Committee:

The
Establishment is responsible for two programs:

information
technology security (INFOSEC); and

signals
intelligence (SIGINT).

Under the
INFOSEC program, CSE provides technical advice, guidance and service to the government on
the means of ensuring federal government telecommunications security and on aspects of
electronic data processing security. Under the SIGINT program, CSE, with the support of
the Canadian Forces Supplementary Radio System, collects, studies and reports on foreign
radio, foreign radar and other foreign electronic emissions in order to provide foreign
intelligence to the government.(18)

As indicated
earlier, the CSE in 1991 expended about 20% or 22% of its budget on INFOSEC or COMSEC
activities. In April 1991, a representative of the Department of National Defence stated
the following about the CSE's INFOSEC responsibility:

... CSE
fulfils its INFOSEC responsibility to government by:

the
provision of keying material;

efforts to
prevent compromising emanations from electronic equipment;

advice to
Canadian industry to assist in development of secure communications and EDP systems;

The CSE has an
important INFOSEC/COMSEC role to play under the government's Security Policy. This
Treasury Board initiative sets out the means by which employees are to be security-cleared
and steps that are to be taken to assure the security of government information and other
assets. In guidelines setting out the government-wide role of different agencies and
departments, the CSE is given the following responsibilities:

The
Communications Security Establishment is responsible for:

(a) developing
standards on communications-electronic security (COMSEC) for the approval of Treasury
Board and advising on their application;

(b)
developing, approving, issuing and advising on the application of technical standards on
COMSEC and for the protection of signals intelligence and cryptographic information and
material;

(c) providing
cryptographic material and documentation to appropriate government institutions;

(d)
international agreements in the communications-electronic security and signals
intelligence programs and approving the release of classified or controlled COMSEC
information and assets to government and non-government entities;

(e) providing
advice and guidance on the planning, acquisition, installation and procedures for using
COMSEC systems;

(f) providing
advice on threat and risk assessments, when requested;

(g) reporting
to Treasury Board, when requested, on the state of COMSEC in the government;

(h)
inspecting, testing and evaluating COMSEC systems and procedures, other than for DND, and,
on request, reviewing government telecommunications to assess adherence to prescribed
COMSEC practices;

(i)
classifying signals intelligence and cryptographic information and material, and
establishing procedures for the systematic review of such classified information and
material for declassification or downgrading;

(j) approving
the allocation of positions requiring special access (SA) to signals intelligence
information and material, and maintaining the inventory of personnel cleared for access to
such information and material; and

(k) providing
a research and development and evaluation capability on security aspects of computer
hardware, software and communications systems to ensure that information is available to
the government on the security of computer systems and their use in government.(20)

There are no
equivalent detailed descriptions of the CSE's SIGINT mandate upon which 80% of its budget
is spent and upon which most of the assistance provided by the Department of National
Defence, Canadian Forces, is probably expended. Reliance will thus have to be placed on
less detailed, more generic, descriptions of SIGINT activities. Granatstein and Stafford
have described the CSE's SIGINT mandate as follows:

The Signals
Intelligence Programme, according to an internal CSE document, "involves the
collection and processing of foreign radio, radar and other electromagnetic
transmissions." This means that CSE listens in to radio and telephone communications
between embassies in Ottawa and their home countries, or between embassies and their
consulates; monitors all national and international telephone calls; listens in to many
foreign radio communications; and reads the electromagnetic transmissions from embassy
typewriters, word processors, etc.(21)

Abram Shulsky
has defined Signals Intelligence in more general terms as follows:

Signals
intelligence (or SIGINT) is the generic term given to the process of deriving intelligence
from the interception of electromagnetic (radio) waves, generally referred to as signals.
It may be subdivided according to the type of electromagnetic wave being intercepted:

The
interception of, and derivation of information from, foreign communications signals (radio
messages) by other than the intended recipients is known as communications intelligence,
or COMINT.

The
interception, processing, and analysis of foreign telemetry (radio signals that relay
information from sensors on board a test vehicle to the test engineers concerning the
vehicle's flight and performance characteristics) are known as telemetry intelligence, or
TELINT.

The
interception, processing, and analysis of noncommunications electromagnetic radiations
coming from a piece of military equipment (such as a radar) while it operates are known as
electronic intelligence, or ELINT.

In
principle, any electromagnetic wave, emitted either as a necessary part or as a by-product
of the functioning of a piece of electrical equipment, is subject to interception by a
receiver that is properly placed and sufficiently sensitive.(22)

Little more is
known in detail about the CSE's mandate. It entered into a COMSEC Memorandum of
Understanding (MOU) with the RCMP as of 31 October 1989 (under the Government
Security Policy) and two SIGINT MOUs with CSIS (under sections 12 (security
intelligence) and 16 (foreign intelligence in Canada) of the CSIS Act).(23) It also has an MOU with the Department of
External Affairs.(24) These documents
establish and structure any arrangements necessary to ensure that government institutions
working together in common areas of activity collaborate effectively, exchange information
and do not duplicate each other's efforts.

The government
in its 1991 Response to the 1990 Report of the House of Commons Special CSIS Review
Committee described the CSE's accountability scheme as follows:

The Minister
of National Defence is accountable to Parliament for CSE. The Minister approves CSE's
major capital expenditures, its annual Multi-Year Operation Plan, and (with CCSI [Cabinet
Committee on Security and Intelligence]) major CSE initiatives with significant policy or
legal implications.

The Chief of
CSE is accountable to the Deputy Minister of National Defence for financial and
administrative matters, and to the Deputy Clerk (Security and Intelligence, and Counsel)
in the PCO for policy and operational matters.

In addition,
arrangements have been put in place to ensure that CSE responds to the government's
foreign intelligence requirements in a manner that is lawful, effective and sensitive to
changes in international relationships. These include the following:

CSE has
in-house legal counsel from the Department of Justice, and consults with senior Justice
officials on legal issues;

CSE consults
frequently with senior officials in the Privy Council Office, the Department of National
Defence and the Department of External Affairs;

CSE is
subject to internal Department of National Defence administrative review mechanisms; and

CSE submits
its strategic plan and all new policy proposals for review by ICSI [Interdepartmental
Committee on Security and Intelligence], which in turn reports to CCSI.

Thus, a broad
accountability system for CSE is in place. Nevertheless such an accountability system can
always be improved and the government has been considering providing the Minister of
National Defence with some additional capacity for review of CSE. Once a decision is taken
on the most appropriate approach, an announcement will be made.(25)

This was the
government Response to the 1990 House of Commons Special CSIS Review Committee
recommendation (No. 87) that the CSE be established formally by statute and that the
Security Intelligence Review Committee (SIRC) be empowered to monitor and review it. So
far, no announcement has been made as to whether and how the Minister of National Defence
is to be provided with additional capacity to review the CSE. It was indicated in June
1993 that this matter was still under consideration and that an announcement would be made
in due course.(26)

Over the
years, serious concerns have been expressed about the technical capacity of the CSE to
intercept communications of all forms and the potential for violation of the rights and
freedoms of Canadians. Similarly, there is a level of dissatisfaction in some quarters
with the level of public accountability for CSE activities and for the expenditure of the
public funds allocated to it.

Although these
concerns have come from different sources at different times, there is little evidence
that the CSE infringes on the rights and freedoms of Canadians through its SIGINT
activities. There has also been no public evidence of financial mismanagement, or
administrative inefficiency or operational inefficacy. In fact, whenever CSE
representatives are pressed on these issues in public, they stress that they do not act in
violation of the rights and freedoms of Canadians and are fully accountable for their
expenditure of public funds.

Because the
CSE is such a secret and secretive government institution, however, it is almost
impossible for outsiders to evaluate the reliability of such reassurances about the
exercise of its functions. The mandate, control and accountability of CSE are not founded
on a statutory basis. The 1975 Order in Council transferring responsibility for the CSE
from the National Research Council to the Department of National Defence dealt only with
administrative responsibility, not mandate, powers, control or accountability. To respond
to this situation, several reform proposals have been made.

In its 1981
report, the Commission of Inquiry Concerning Certain Activities of the Royal Canadian
Mounted Police recommended that an Advisory Council on Security and Intelligence be
established and that the scope of its review powers should extend to all federal
government organizations employed to collect intelligence through clandestine means
(except for the RCMP and other federal police forces).(27) Had this proposal, which was not accepted in its entirety
by the government of the day, been implemented, it would likely have caught the CSE in its
ambit; however, it would by itself have been inadequate unless the CSE's mandate and
powers had been established by Act of Parliament.

The Special
Senate Committee on the Canadian Security Intelligence Service dealt indirectly with the
CSE in its 1983 report. It proposed that the Canadian Security Intelligence Service
(CSIS), whose founding legislation it was then considering, should be given the
"operational monopoly" of foreign intelligence activities engaged in by the CSE
and other similar organizations.(28) This
proposal, which was not accepted by the government of the day, would have had the effect
of subjecting CSE activities to the review or oversight jurisdiction of the Security
Intelligence Review Committee; however, this proposal did not define operational monopoly.

In its 1989
submission to the House of Commons Special CSIS Review Committee, the Security
Intelligence Review Committee recommended that Parliament consider enacting legislation to
provide for the independent monitoring of other components of Canada's intelligence
network in addition to CSIS, which is already subject to oversight by SIRC itself.(29) Unfortunately, the submission provided no
further details to buttress its proposal and did not deal with the CSE directly, but
rather by implication.

As was seen
earlier in this paper, these reform proposals were echoed in 1990, when the House of
Commons Special CSIS Review Committee recommended that SIRC's review jurisdiction be
extended to include the CSE, which should be given a statutory basis.

A variation on
these proposals was made by John Starnes, the Director of the RCMP Security Service in the
early 1970s, when he recently urged that responsibility for the CSE be transferred by
Order in Council from the Department of National Defence to CSIS.(30) This step would subject the CSE to the same control and
accountability mechanisms (ministerial direction, Federal Court warrant approval,
Inspector General auditing and SIRC review) as CSIS. It would affect CSIS itself, since
its statutory basis may not be adequate to allow for such an easy administrative
integration of the CSE into the Service. Such a proposal would also have the effect of
giving CSIS a foreign intelligence mandate, thus changing the nature of that organization.

The reform
proposals made for CSE thus far have been inadequate. Effective proposals must address in
detail the mandate and powers of the organization and the means necessary to control it
and keep it accountable, assuming its continued existence is deemed necessary; the agency
must also be provided with a basis in law founded on an Act of Parliament.

As can be seen
from the contents of this paper, not much is known about the detailed functions of the CSE
and the resources available to it. Minimal as it has been, the public debate about this
government institution has centred on the capacity of the CSE to violate the rights and
freedoms of Canadians and on the need to ensure that it is accountable to Parliament.

Ward Elcock
told the House of Commons Sub-Committee on National Security in June 1993 that:

CSE is a
foreign intelligence collection agency. The very nature of its work depends upon a degree
of secrecy. To the extent to which its work is not secret, it loses its capacity to
function and to collect information that is of use and of value to the Government of
Canada.(31)

This statement
puts the key issue into its most basic terms: how can a government institution that
functions most effectively in the shadows be held publicly accountable without
compromising its efficacy? This question is especially important when it relates to an
agency with the capacity to violate the rights and freedoms of Canadians.

As indicated
at the outset of this paper, there have been dramatic changes in the political situation
in many parts of the world. Now that the Cold War is over, many new security and
intelligence issues are coming to the fore. As a result, countries are considering major
adjustments to their security and intelligence agencies. As Wesley Wark has put it:

It is
legitimate to ask ... why should any of these roles fall into the hands of intelligence
services, rather than some other kind of organization?(32)

Indeed, why
should these functions, if they are indeed still necessary, be performed by such an
agency? And can such an agency be made publicly accountable to Parliament without
compromising its primary mandate? These are the important questions that must be answered
to ensure the effective protection of the rights and freedoms of Canadians.

(2) Solicitor General of Canada, On Course:
National Security for the 1990s, Supply and Services Canada, Ottawa, 1991, p. 51
(cited as On Course (1991)).

(3) For a more detailed history of the
Examination Unit of the National Research Council, see: J.L. Granatstein and David
Stafford, Spy Wars: Espionage and Canada from Gouzenko to Glasnost, Key Porter
Books, Toronto, 1990, p. 20-46; Peter St. John, "Canada's Accession to the
Allied Intelligence Community 1940-45," Conflict Quarterly, Vol. 4,
No. 4, Fall 1984, p. 5-21; and Wesley K. Wark, "Cryptographic Innocence:
The Origins of Signals Intelligence in Canada in the Second World War," Journal of
Contemporary History, Vol. 22, 1987, p. 639-665.

(23) Letter from Ward Elcock, Deputy Clerk,
Security and Intelligence, and Counsel, Privy Council to Blaine Thacker, M.P., Chairman,
Sub-Committee on National Security, 13 April 1992.

(24) House of Commons, Sub-Committee on
National Security, Proceedings, June 1993, 11:5-6 (Ward Elcock).

(25) On Course (1991), p. 54-55.
The Cabinet Committee on Security and Intelligence is chaired by the Prime Minister, while
the Interdepartmental Committee on Security and Intelligence is made up of senior public
servants and chaired by the Clerk of the Privy Council.

(26) House of Commons, Sub-Committee on
National Security, Proceedings, June 1993, 11:8 (Ward Elcock).

(27) Commission of Inquiry Concerning Certain
Activities of the Royal Canadian Mounted Police, Freedom and Security under the Law,
Second Report - Volume 2, Supply and Services Canada, Ottawa, 1981, p. 885.

(28) Senate, Special Committee on the Canadian
Security Intelligence Service, Report, Delicate Balance: A Security Intelligence
Service in a Democratic Society, Supply and Services Canada, Ottawa, 1983,
p. 18-19.

(30) John Starnes, "Cryptography Unit
Would be More Accountable under CSIS," Ottawa Citizen, 17 July 1991. A
similar proposal was made by the Honourable Jean-Jacques Blais, a former Solicitor General
and member of SIRC, in "Committee Should be Expanded to Review Other Agencies," Ottawa
Citizen, 2 July 1992, although he placed his emphasis on expanding SIRC so that
it could monitor the CSE.

(31) House of Commons, Sub-Committee on
National Security, Proceedings, June 1993, 11:10 (Ward Elcock).